Consumers splash out

According to a recent article by Samantha Enslin of Business Report, "The festive season is likely to keep retail businesses, and those associated with consumer spending, bubbling, unless an interest rate hike, which Reserve Bank governor Tito Mboweni has implied is on the way, dampens spending".

According to a recent article by Samantha Enslin of Business Report, "The festive season is likely to keep retail businesses, and those associated with consumer spending, bubbling, unless an interest rate hike, which Reserve Bank governor Tito Mboweni has implied is on the way, dampens spending".

"An interest rate hike is not likely to be large and so it is expected to just curb consumers' enthusiasm and not substantially knock confidence. Indeed, a hike may even encourage consumers to settle some debt and save for a rainy day.

"The confidence that consumers have to spend often means they spend more than they have - something that is worrying Finance Minister Trevor Manuel.

"Manuel warned South Africans last week not to be lulled into a sense of complacency in the benign interest rate climate and fall into a debt trap that they could struggle to get out of as interest rates started rising. He said the trend internationally was towards higher interest rates.

"But with the silly season almost upon us, it is hard to imagine that consumers are going to resist."

Stats SA revealed this year that the consumer spending boom had shored household debt to 73 percent of disposable income.

This was a clear indication that South Africans are living beyond their means. The shopping frenzy continues despite warnings for people to save.

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